When it comes to employee benefits in Belgium, healthcare is the most appreciated benefit by all Belgian employees. This is because social security does not cover the most expensive treatments and pharmaceuticals. Life insurance and retirement contributions follow close behind healthcare.
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It is important to note that when planning employee benefits in Belgium supplementary employee benefits are not mandatory. However, it is very common for multinational employers to provide benefits above and beyond the federal requirements to compete for talent because the state pension is not enough to provide the level of support people expect.
– Social Security
Belgium has a rather broad provision of social security, and employers and employees pay a monthly social quotation based on the employee’s gross salary (together 38.07 % of salary). From this, the state provides a basic pension and healthcare.
Medical costs in Belgium rise every year and the federally covered social security is not able to fully cover the treatment costs, especially for serious/chronic illness. Employees really need additional coverage to pay for this type of medical care. Ambulatory (outpatient) and dental coverage are also on the rise as an employer sponsored benefit. In fact, dental care is becoming a luxury, especially if you don’t have extra insurance.
– Workers’ Compensation
It is mandatory for every employer to offer workers’ compensation coverage, although the need for additional insurance provided by the employer is vast and increasing. Belgian social security and workers’ compensation pays 60% to 80% of an employee’s gross salary. The maximum payable amount is €44,957.86 annually. Employees who earn more than this amount do not get a refund for the part of their salary that’s above this limit. In such a case, the employer provides supplemental insurance.
– Death/Life Insurance
Life insurance is a very important benefit for young employees and is low cost. Nevertheless, younger employees do not appreciate this benefit even though it is essential, especially when they have children and a mortgage.
– Retirement Savings
Additional pension savings is also essential, especially for older employees. The Belgian state pension has no indexing and payments are very low topping out at €1,500 per month. To put this in perspective, a stay in a rest home costs anywhere from €1,700 to €2,000 a month.
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Employers looking to design employee benefits in Belgium must guarantee a minimal rate of 1.75% on the premium invested in pension plans. If the return falls short, the employee must make up the difference out of their own pocket. The Belgian employee retirement benefits market up to now was mostly a branch 21-market (with guaranteed returns). Since last year, however, several insurance companies are no longer able to guarantee the 1.75 %. That’s why more and more companies change their investment policy to branch 23 (equity-linked), in the hope that this investment delivers a 1.75 % return.
Average Cost for Employer Sponsored Benefits
– Social Security – For social healthcare and retirement, employers and employees pay a monthly social quota based on the employee’s gross salary (together 38.07 % of salary). Employers pay 25 % or 13,07 % per employee.
– Healthcare – Employer sponsored health plan cost €15 to €20 per employee per month depending on the number of insured and the places they live. Ambulatory (outpatient) and dental coverage is approximately another €20 EUR per employee per month. The cost for family members is the same, but the employee normally pays this cost. Also note, healthcare policies in Belgium are not tax-deductible.
– Retirement – The average cost of group retirement, death, and disability coverage is 5% to 10 % of an employee’s gross salary. It is usually part of a defined contribution plan.
– Worker’s compensation – The budget can differ for every personnel category (board of directors, management, employees). Most plans are defined contribution plans with contributions coming from only the employer. Additionally, employees highly appreciate a monthly rental allowance in case of disability.
Advice to Employers
When procuring your employee benefits in Belgium it is important your employee benefit plan fits all employees, making the cafeteria technique an ideal instrument. The needs of employees evolve during their lives and the cafeteria method lets them choose a coverage that meets their risk tolerance within the provided budget.
As the pension age moves on to 67 (and perhaps later), young employees are more interested in risk coverage than in pension build-up. It is also important to note that young people more and more use their pension reserves to buy real estate (every Belgian is born with a brick in his stomach!). They also appreciate mobility packages.
To non-Belgian employers, the Belgian system seems very complicated because employee benefit design should supplement social security. The split of disability-coverage in workers’ compensation and private health insurance is an example of this. What is also not evident, is that supplementary pension-plans payout as a lump sum, not on a monthly basis.